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Bangladesh’s IAF Wins Major Grant from E.U.

Bangladesh just received some welcome good news: the International Apparel Federation (IAF) was recently awarded a grant from the European Union (E.U.) to improve the South Asian nation’s jerry-built infrastructure.

The grant to the IAF is also extended to two of its member associations, the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and the Hellenic Clothing Industry Association (HCIA).

The scope of the project funded by the E.U. is wide including the building of additional capacity, the updating of knowledge transfer technology, the extension of existing networks, and access to various training seminars to be held in both Europe and Bangladesh.

The IAF is a prominent trade organization whose membership largely comprises retailers and apparel manufacturers, as well as some industry-related associations.

Some have interpreted the grant as an important step for Bangladesh in maintaining good commercial relations with the E.U. Rumors have swirled that, as a symbolic show of protest against Bangladesh’s crawling progress toward improved factory safety and labor conditions, the E.U. might pull its duty free access to European markets, including apparel products. A member of the WTO since 1995, Bangladesh benefits from the E.U.’s “Everything But Arms” arrangement, which allows it duty free access for all exports, excluding arms and ammunition. And while the U.S. has suspended duty free access for Bangladesh until it improves factory safety, this has little effect on the garment industry since it only applies to goods like golf equipment, kitchen appliances and ceramics. Bangladesh’s garment industry has never qualified for duty free access to the U.S. market.

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Some progress has been achieved, if haltingly. The Accord on Fire and Building Safety in Bangladesh (AFBSB) finally arrived at an agreement regarding the new inspection standards that will apply to all its signatory members. These standards largely apply to factory building safety with particular reference to fire and electrical ordinances. As AFBSB’s website explains, the new strictures are the result of a collaborative effort that involved input from several sources: the National Tripartite Plan of Action, the Alliance for Bangladeshi Worker Safety (ABWS) and the International Labor Organization. The final product is based on the existing Bangladesh National Building Code, albeit in thoroughly revised form.

Nevertheless, Ambassador to Bangladesh William Hanna offered some pointed criticisms of Bangladesh’s schedule for reform. Specifically, he complained that it was adding much needed factory inspectors at too slow a pace and that the creation of a comprehensive database of garment factories must be developed more quickly.

The IAF released the following statement in response to the news: “The IAF will make sure that more IAF members than BKMEA and HCIA will benefit from the project by setting up a peer group to which it invites its members with specific interests in the Bangladesh knitwear industry. Project execution will start very soon.”

“The apparel industry undeniably plays a big role in the industrial development of many countries creating millions of jobs worldwide. Where big improvements in production infrastructure can still be made, big productivity gains and big improvements in working conditions can be combined,” the statement added.

“Therefore, IAF is pleased to contribute to the industrial development of Bangladesh. Knowledge is key and with an expert network, IAF is able to transfer this knowledge for improving the apparel industry as a whole.”

Bangladesh’s $20 billion garment manufacturing industry is heavily dependent upon its access to European markets. Despite its recalcitrant political troubles, Bangladesh continues to be a magnet for apparel suppliers. Its readymade garment exports climbed nearly 20 percent year-on-year during the first half of 2013. From July to December 2013, garment exports hit $11.93 billion, a significant improvement over the same period the previous year, which achieved $9.95. Exports of woven garments did particularly well, leaping 20.37% to $5.98 billion while knitwear exports increased by 19.55% to $5.95 billion. The Bangladesh government expects total garment exports this year to increase a little more than 12 percent to approximately $24 billion.